Car loans v. forecourt finance

If you are on the market for a new car it is important to plan and to prepare for it. The better prepared that you are, the higher the chances that you will have a satisfying car buying experience. As a shopper, you not only have to research, shop around and narrow down your choices on the car that you want, if you plan to finance or use a loan to buy your new car you will also need to shop around for car loans. By shopping around for a loan, there is a very strong likelihood that if you will find a suitable car loan for you. A good car loan is one with minimal fees and an excellent interest rate. This alone could save you hundreds, if not over a thousand pounds in costs.

When you are looking for a way to finance your new car you usually have at least two options: a car loan from a bank or forecourt financing. Getting car loans from a bank requires just a little bit of planning, getting a forecourt loan is something that can be done spontaneously and on the spur of the moment. In fact you can often be preliminary approved for forecourt finance while you are standing at the dealership buying the car. It is important to know the different between the two as well as to know which of these two options is right for your situation.

Financing a new car:

• Decide on the car you want to buy
• Decide to apply for a bank loan or forecourt finance
• Shop for your car
• Pay for your car through your loan or forecourt finance

As with any kind of purchase at all, it makes sense to learn what you are signing up for, to weigh your loan options and then to choose the credit line that will offer you the best deal for your individual needs. When a person chooses a car loan as the funding for a new car, they usually have to get pre-approval for that loan from a bank prior to the day the actually shop for the car. Some people choose to get their loan from the bank where they do their everyday banking or they shop around and will sign up with the bank that has the best deal. Ultimately, the better your credit record, the more choices you will have to shop around for car loans.

Forecourt finance is a line of credit that is often offered to you by the dealership itself when you are shopping for a car. Forecourt financing comes in two distinct options: Hire Purchase (HP) and a Personal Contract Purchase (PCP). Qualifying for forecourt financing is often much easier than qualifying for a car loan because their requirements are not as strict when it comes to your credit record. This means that the interest on forecourt financing is usually much higher than that of car loans.